The British Bankers' Association has told Mervyn King, the Governor of the Bank of England, to refrain from commenting publicly on City pay, after Mr King criticised bankers' salary packages yesterday.

Speaking today at a conference for company treasurers, Angela Knight, chief executive of the BBA, said that Mr King should avoid provoking public squabbles with the banking sector.

Mr King had told the Treasury Select Committee yesterday that the big pay packets available in the City were deterring talented graduates from joining other industries. "I do think it is rather unattractive that so many young people, when contemplating careers, look at the compensation packages available in the City and think that these dominate almost any other type of career," Mr King said.

"That is not an attractive position to be in when such a high proportion of our talented, young people naturally think of the City as the first place to work in... It should be one of the places, but not the only one."

The Governor also said that the compensation structures at some banks had encouraged a dangerous level of risk-taking that had helped push the world into a liquidity crisis.

"Banks have come to realise they are paying the price for having designed compensation packages which provide incentives that are not, in the long run, in the interests of the banks themselves," Mr King said.

The City paid out about £7.2 billion in bonuses for 2007.

Ms Knight hit back today at the ACT Annual Conference, according to a report by Bloomberg. She told the conference that although the Bank Governor may have been correct on some points, it was not helpful to argue about executive compensation in the public eye.

"This is a financial services industry on which a lot of jobs are hanging," she is reported as saying. "I don't think we should have the luxury of public squabbles." Ms Knight went on to say that she was glad that bright, young people were attracted to banking.

The central bank Governor is the second prominent figure to criticise bank wages in recent weeks. Last week Richard Lambert, Director General of the Confederation of British Industry (CBI) said that there was a misalignment between the interests of bank executives and the companies' shareholders. He said that bankers took risks with investors' cash that they would not have done with their own, in pursuit of quick profits.

Mr Lambert said: "This pattern of behaviour has been exacerbated by a remuneration structure which has encouraged some employees to take spectacular short-term risks, confident that if things work out well they will reap huge rewards, and if they don't they won't be around to pay the price. If it had been their own equity at risk, things might have played out differently."

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